CREATING WEALTH IN YOUR SLEEP
The American Dream, it is something that is engrained in us as we enter the workforce. For many of us, the American Dream is being able to live a comfortable life, financially free while doing the things we love. It is hard for many of us to, for example, spend time with family, if we are constantly at the office. It would be nice if we could all not worry about our bills, but we need to pay them somehow. The most common way to do so is, of course, getting a job and working to earn a paycheck. It would be ideal if our money can work for ourselves, so we have more time to live the American Dream. How can I do that? How can I create income when I do little or no work? This where is the idea of passive income comes into play.
At Wealthy Habits, we teach our students the difference between passive and earned income. Earned income is the income derived from work, while passive income is an investment of time to yield a stream of future income. But how does one create passive income?
You will need three things, talent, time, and money. I was able to create passive income as a college student with some time and talent, and not much money. More specifically, I was able to launch a small website development company.
First, take some time to identify your talents. Be honest with yourself. Sometimes we identify talents that we want to have, not ones we currently have. Sit with someone you trust and ask them what talents you might have. Perhaps pull out your resume and look at what you have done in your past. Even if you did a job in your 20’s, you might have learned a set of skills or refined the ones you already had. You can even think back to when you were in school, or if you are a student, even better. You might remember a class or project that you enjoyed taking/doing, explore that some more! For my example, I discovered one of my talents is website development. Did I get a degree in web development? No, but I started to play with websites on my own to see how they work. I eventually just practiced on my own to refine my skill along with acquiring clients to better my skill. Another way to better your skill is to take an online course. Sources such as Coursea and IEX offer free classes by universities. Or simply, YouTube can be a great option
Now, you will need some time, and you might be saying, I don’t have much time! Right, neither do I, but you do have some. Maybe not enough for a part-time job but maybe 10 to 15 hours per week, but simply put, the more time you have, the more money you could make. The more time you put into your side income source, it can make more money. Don’t expect to make thousands in the first month like TikTok makes it look. Whether you start a business or an investment account, time is money. If you are having a tough time making room in your schedule, make a list of priorities that take up a lot of time. Write down the number of hours each of your priorities take and rank them. Eventually, you will see there is room to compromise. I had to do this as a college student. It is difficult to juggle around classes, exams, social time, etc. I was able to drop out of an organization my freshman year, with the option to rejoin the next year. I now had the time I needed.
Lastly, you need some money to get started. Typically, the more money you have to get started, the more money you can potentially make. Now, this is a vast generalization. If you have an investment account, the more money you have in it, and the more time you let it sit there, the more returns you can make. If you had the idea of buying real estate and then renting it out on Airbnb, there is no guarantee that it will return a dollar tomorrow. With my website development business, I started with $150. It costs me a little to set up my servers, domains, etc.
The last step is to see how these three things combine with each other. Ideally, you have some of each: some money, some time, and some talent. Not everyone is going to have a balance. Some people might have no money, no time, but lots of talent. And that’s fine! With the power of the internet, it is easy to start something that might make you passive income. Here are some ideas:
- Invest in stocks, real estate, crypto
- Rental properties
- Digital products
- Fractional shares
- Start a blog
- Audiobooks (narrate books)
It is not easy to make money passively. We have all seen the Facebook and TikTok posts, young people flaunting their money and explaining how easy it is for someone to create passive income. Chances are, they got lucky, and you may not get so lucky. There are hundreds of online ideas that you can potentially pursue, but if you don’t have the time, money, or talent to do it, you won’t make a dime. Everything has risks, so take the time to research before you take your first step. At the end of the day, everything is a learning opportunity. Your side income source can be something you earn from or learn from, or even both!